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Thursday, April 9, 2015

Cows, Robots, The Google Car and Thomas Piketty

This post was originally published on April 9, 2015. I revised it on December 14, 2016, to add spiffy photos for a more attractive post. In the past 20 months, development of self-driving vehicles has proceeded as expected, including a demonstration by Uber of a self-driving truck, nicknamed Otto. The truck drove 120 miles from Fort Collins to Colorado Springs, transporting Budweiser beer, as shown below. DR, 12/14/2016
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This blog post follows on my previous post “America is
Inventing Again”. This post looks at the
social and economic disruption resulting from new inventions. Computers and automation have been eroding
jobs in office clerical and factory professions since 1980 or earlier. Google’s self-driving car technology now
threatens another 3.6 million jobs in the United States.

The ease and efficiency of replacing labor with capital is a
key point in Thomas Piketty’s work.
Increasing automation is expected to increase wealth inequality, as
fewer workers receive paychecks, and a larger share of the value of production
accrues to owners of capital. While new
technologies offer clear benefits in economic efficiency and safety, it is a
fair question to ask where we are going as a society, and to cast a troubled
look at Kurt Vonnegut’s novel “Player Piano”.

Cows

It was an improbable scene.
Cows, ready for milking, walked from the field and formed a queue in the cattle chute, like shoppers in a
supermarket check-out line. When a cow
reached the head of the line, she stepped into a glass-sided stall
where she received a tasty treat. In the
stall, a robot surveyed and weighted the cow.
A laser-guided device washed the udders, attached suction cups and milked the cow. Milk flowed through
lines to a gathering vessel, where the quality, volume and temperature of the
milk was measured and recorded. Visitors watched the process through the glass walls of the stall, and as the
milking proceeded, a few curious cows stretched over the glass for a better
look at the visitors. When the milking
was done, the cow walked back outside to pasture, with no human interaction except
for the curious gaze of visitors, and the equally curious gaze of the cow in
return.

The robotic milking facility is an experimental dairy farm
operated by Michigan State University.
The manager of the farm proudly showed us how the health of the cattle
is monitored by the weight and temperature of the cow and the frequency, volume, and quality of the
milk. Any changes are noted by computer
and immediately brought to the attention of the dairy manager. A standard dairy using traditional milking machines would employ eight to ten workers, who would manage the herd, milk
the cows and haul the milk containers.
The robotic facility allowed a single person to run the entire dairy
operation, spending his hours studying a computer screen. The manager of the experimental farm told us
that the number of robotic dairy farms in Michigan is going up exponentially. He didn’t say anything about the laborers displaced by automation. Clearly,
they must find other work.

We are building
robots and putting people out of business.
With a nod to Kurt Vonnegut, so it goes.

The Player
Piano Society

I’m not the first person to notice. Kurt Vonnegut’s first novel, published in
1952, was Player Piano (a particularly apt title). Vonnegut drew freely on earlier dystopian
novels Brave New World (Aldous Huxley) and We (Yevgeny Zanyatin), published in
1931 and 1921, respectively. Player
Piano describes a dystopian futuristic society with massive unemployment, due
to the displacement of workers by machines.
Only a small percentage of people with the greatest intelligence and
education could aspire to an actual job, in which they would create and run the
machines that displace human labor.

It is clear that Vonnegut correctly foresaw that automation
and technology would put many people out of work. Further, Vonnegut foresaw that future jobs
would require more education and more intellectual challenge than earlier
jobs. Our remaining question is how far
technology and economic forces will take us toward the “Player Piano Society”.

Secular
Change in the American Economy

This blog has previously noted a secular change in the
American economy indicated by progressive weakening in the job market.

In each of the past eleven
recessions, job recovery has been progressively slower. Job losses during a recession have followed
approximately the same trajectory in each recession, but job recovery has been
much flatter, in nearly linear fashion ever since World War II. Recent recessions, especially the great
recession of 2008, have also been deeper than earlier recessions, with greater
job losses.

I saw this happen during the course of my career in the
petroleum industry. I was shocked, as a
newly minted manger in 1987, when the head of our Human Resources department
gave a presentation showing his vision for the future company. The company he envisioned had one-third of
the total employees, and half as many geologists and engineers. I was baffled. We had a mission to make the company
grow. But the HR executive was
correct. In layoff after layoff, we
fired capable employees who were no longer necessary to the company. A
department of draftsmen with 15 employees was reduced to five, then one, then
zero. In one division, eight secretaries
were reduced to four, and then to one.
The company implemented enterprise-wide accounting software, and a
department of twenty-eight accountants collapsed to a single accountant. With computer workstations and information systems,
specialists became more productive, and the number of geologists and engineers
was cut in half, exactly as envisioned by the Human Resources executive fifteen
years earlier.

Data from the Bureau of Labor Statistics shows the decline
of several professions due to automation. Office clerical professions have lost about
1,000,000 jobs since 1997. The job
titles showing the greatest losses can be expected: Typist,
Data Entry Keyer, Information Clerk, Telemarketer, Office Machine Operator, and
Telephone Operator – all made obsolete by the computer. The job title Secretary has shown surprising growth of about 500,000 jobs. Perhaps this growth reflects
re-classification and re-assignment of the clerical workers previously doing
other work.

Industrial jobs show a similar decline, in jobs such as
these: Hand Packers and Packagers, Team Assemblers, Tool-and-Die Makers, Machine
Feeders and Offbearers, Sewing Machine Operators, etc. This
is only a sampling of industrial jobs, not a comprehensive list. Over 600,000 jobs have been lost in these
categories since 1997. Research by the
Boston Consulting Group, reported in Yahoo Finance, says that 25% of all
factory jobs world-wide will be replaced by robots in the next decade. Robots are currently doing 10% of factory
work.

The next category of jobs lost to automation will be in the
area of transportation.

Job Losses
from Self-Driving Cars

I discussed the Google Car at some length in my last post,
“America is Inventing Again”

Apple, Incorporated also has an initiative to develop self-driving cars. Apple’s concept would involve fleets of autonomous taxis,
universally available in cities. Apple’s
concept would reduce individual car ownership, and reduce the total number of vehicles
needed and manufactured. But the most
important societal change resulting from self-driving cars is generally
overlooked. Self-driving cars will
put a lot of people out of work. The
Bureau of Labor Statistics reported the following numbers for people employed
as drivers in the United States in 2013.

Truck Drivers, Delivery and Route Workers

776,930

Truck Drivers, Tractor-Trailer

1,585,300

Bus Drivers, School

496,110

Driver/Sales Workers

396,470

Bus Drivers

157,830

Taxi Drivers and Chauffeurs

170,030

3,582,670

Many of these jobs involve repetitive routes, or city routes
which can be easily captured in a database.
Safety, of course, will be the
major motivation for replacing many drivers, particularly school bus drivers,
but cost will also be a consideration. Long-haul
(tractor-trailer) truckers may be particularly vulnerable to being replaced,
because a robotic driver does not need to sleep, and is not limited to 8 hours
of driving by federal regulations. The productivity of the capital in each truck can
be increased three-fold by replacing the driver with a robot.

National Public Radio reports that Truck Driver is now the
most common profession in 29 of our 50 states.
If all of the professional drivers in America were replaced by
self-driving vehicles, it would add 2.5% to the nationwide unemployment rate.

Google’s self-driving technology will put lots of people out
of work.

Opportunity
for Young Workers

The “millennial generation” is the first generation in
America to have a lower standard of living than their parents (previously
documented in this blog,, http://dougrobbins.blogspot.com/2013/02/wealth-inequality-in-america-young.html). Millennials
came of age during a time of economic disruption from the great recession, and
were hit harder than other generations by unemployment and
under-employment. Simple observation of
young people on Facebook shows that they are acutely aware of declining
opportunity as a result of automation. The
social result is a generation which is increasingly cynical, jaded and
politically disaffected. This is not
healthy for our society.

Thomas
Piketty

Thomas Piketty is an economist and author of the
controversial book “Capital in the Twenty-First Century”. The title is a subtle nod to Marx’s “Das
Kapital”. Piketty’s book is a welcome
return to the idea that macro-economics is not simply about the productivity of
a society, but should also be concerned with the well-being of individuals and
groups of people in that society.

Piketty’s essential thesis is that if the return on capital
exceeds the growth in the economy (as it does), the owners of capital will
increase their share of total wealth, leading to greater wealth
inequality. The well-documented increase
in wealth inequality in the United States since 1990 would seem to support Piketty’s
conclusion.

Economics graduate student Matthew Rognlie is one of Piketty’s
many critics. Rognlie raises the issue
of the future return on capital (ROC).
Piketty believes ROC will increase; Rognlie believes that ROC will
decrease. The future return on
capital will depend largely on how easily capital can replace labor. The evidence shows that many workers have
been replaced by machines over the past 35 years, and the trend will probably
continue. I’m still with Piketty.

Areas of declining employment due to automation include
clerical work, factory workers, packers and delivery workers, and most
recently, technical “knowledge workers”.
We are on the cusp of another large displacement of workers by automated
driving technology. The automated
technology will improve safety, lower costs and utilize the capital invested in
vehicles more efficiently. But the
technology has a social cost borne by displaced workers, their families, and
taxpayers.

I disagree with Piketty somewhat on his prescribed remedies
for wealth inequality. The issue of
capital versus labor, going back to Karl Marx, cannot be solved simply by
taxation and redistribution of wealth. The opportunity for meaningful employment and
productivity is essential for human dignity.
It is necessary for each person on this planet to validate our existence
by the positive changes we bring about in the world. We need to earn our own way, and our economic
system fails if it does not provide that opportunity.

Conclusion

I am no Luddite. I
favor innovation, new technology, and economic efficiency. I believe that society cannot stand still,
and must advance and change. But I think
it is a fair question to ask the inventors who are relentlessly replacing human
labor with machines, “Where are we going?”
Are we turning into the Player Piano Society?

Can workers displaced by technology easily obtain new employment
with equal compensation, allowing them the dignity of earning a living? Can we provide sufficient opportunity to the
youth, who are entering the job market without experience and skills? What will be the impact on society if we fail
in these things?

Perhaps we should demand that for every new technology that
eliminates a job, inventors must create another technology that creates a new
job, accessible to the displaced workers.

NPR infographic showing the most common job in each state, from 1978 to
2014.

National Public Radio (NPR) recently published a fascinating
infographic on their website, showing the most common job in each state from
1978 to 2014. In 1978, the most common
job in 20 states was secretary. With the
advent of the personal computer in 1980, secretarial jobs declined, until by
2014, secretary was the most common job in only five states. Meanwhile, truck driver took the place of
secretary as the nation’s top job. By
1996, and still today, truck driver is the most common job in 29 of our 50
states. But driving, as a profession, is
likely to be the next major target of automation.

Google is leading in terms of developing self-driving cars. Competitors started later, but are serious in
their efforts to bring their own vehicles to market. Both old-line companies and giant new
technology companies are participating in the race to bring the first and best
autonomous vehicles to market.

Apple’s effort is perhaps the most interesting. Apple is pursuing a synthesis of the new
transportation ideas. Their vehicles
will be self-driving, like Google’s; their vehicles will be all-electric, like
Tesla’s. And their business model will
involve fleets of cars available anywhere, like taxis, and accessible by mobile
devices like Uber’s ride-sharing service.
This concept, for many people, would over-turn the paradigm of
self-ownership of a vehicle. As a
society, the Apple concept would be more efficient. A fleet of autonomous taxis would require
fewer vehicles on the road, and require fewer vehicles to be manufactured.

Discussion of America’s skills gap.
We have 9 million unemployed, and 5 million available jobs. But the available jobs require higher skills,
and our unemployed workers are not capable of filling those jobs.

Here’s a bit of trivia for you. There is about one ton of neodymium in every large wind turbine. Neodymium is element number 60 on the ...

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About me, consider my favorite quote about Don Quixote, from "The Man of La Mancha":

...A country gentleman, no longer young. Being retired, he has much time for books. He studies them from morn to night, and often through the night and morn again, and all he reads oppresses him; fills him with indignation at man's murderous ways toward man. He ponders the problem of how to make better a world where evil brings profit and virtue none at all; where fraud and deceit are mingled with truth and sincerity. He broods and broods and broods and broods, and finally his brains dry up. He lays down the melancholy burden of sanity...."